Research in this area has shown that personal carbon trading would be a progressive policy instrument – redistributing money from the rich to the poor – as the rich use more energy than the poor, and so would need to buy allowances from them. This is in contrast to a direct personal carbon tax, under which all lower income people are worse off, prior to revenue redistribution – though a direct carbon tax may be applied to businesses, after a period in which they have time to adapt and prepare.

Proponents of personal carbon trading claim that it is an equitable way of addressing climate change and peak oil, as it could guarantee that a national economy lives within its agreed carbon budget and ensure a fair access to fuel and energy. They also believe it would increase ‘carbon literacy’ among the public, while encouraging more localised economies.

But personal carbon trading has been criticised for its possible complexity and high implementation costs. As yet, there is minimal reliable data on these issues. There is also the fear that personal “rationing” and trading of allowances will be politically unacceptable, especially if those allowances are used to buy from industries who are already passing on costs from their participation in a carbon levy or trading schemes such as the EU Emissions Trading Scheme

Analysts have noted that to implement any effective carbon rationing system, “the government must convince the public that rationing levels are fair, that the system is administered transparently and fairly, and that evaders are few in number, likely to be detected and liable to stiff penalties if found guilty.”

The scheme was the subject of a UK government pre-feasibility study in 2008, with an All Party Parliamentary Group report in 2011. In May 2008 the government department DEFRA completed a pre-feasibility study into Tradable Energy Quotas (TEQ’s) with the headline finding that “personal carbon trading has potential to engage individuals in taking action to combat climate change, but is essentially ahead of its time and expected costs for implementation are high”. Based on this DEFRA announced that “the (UK) Government remains interested in the concept of personal carbon trading and, although it will not be continuing its research programme at this stage, it will monitor the wealth of research focusing on this area and may introduce personal carbon trading if the value of carbon savings and cost implications change“. The UK’s Climate Change Act 2008 grants powers allowing the UK Government to introduce a personal carbon trading scheme without further primary legislation.

Later that same month the UK Parliament’s Environmental Audit Committeeproduced their report on the subject, which concluded that ”personal carbon trading could be essential in helping to reduce our national carbon footprint” and rebuked the Government for delaying a full feasibility study, stating that “although we commend the Government for its intention to maintain engagement in academic work on the topic, we urge it to undertake a stronger role, leading and shaping debate and coordinating research”.